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Notes to Consolidated Financial Statements for the
Years Ended December 31, 2001, 2000 and 1999

6. INCOME TAXES

1.

Summary of Significant Accounting Policies
2.

Business Acquisitions and Dispositions
3.

Business Segments
4.

Regulatory Matters
5. Joint Ownership of Generating Facilities

6.

Income Taxes
7. Derivative Instruments, Hedging Activities and Credit Risk
8. Investment in Affiliates and Related Party Transactions
9. Property, Plant and Equipment
10. Debt and Credit Facilities
11. Nuclear Decommissioning Costs
12. Guaranteed Preferred Beneficial Interests in Subordinated Notes of Duke Energy or Subsidiaries
13. Minority Interest Financing
14. Preferred and Preference Stock
15. Commitments and Contingencies
16. Common Stock and Equity Offerings
17. Stock-Based Compensation
18. Employee Benefit Plans
19. Quarterly Financial Data (Unaudited)
20. Subsequent Event
INCOME TAX EXPENSE       Years ended December 31
In millions 2001 2000 1999
Current income taxes          
    Federal   $ 826     $ 679 $ 525
    State     106     109 138
    Foreign     24     18 1
        Total current
                income taxes		     956     806 664

Deferred income taxes, net

          
    Federal     165     187 (126 )
    State     9     13 (65 )
    Foreign     33     29 (1 )
        Total deferred income
                taxes, net		     207     229 (192 )

Investment tax credit
    amortizationc

     (13 )   (15 ) (19 )
Total income tax expense   $ 1,150 a   $ 1,020 $ 453 b
a Excludes $59 million of deferred federal and state tax benefits related to the
  cumulative effect of change in accounting principle recorded net of tax. (See
  Note 1.)
b Excludes $404 million of current federal and state tax expense related to the
  extraordinary item recorded net of tax. (See Note 1.)
c Unamortized investment tax credit was $189 million at December 31, 2001.



INCOME TAX EXPENSE RECONCILIATION TO STATUTORY RATE
      Years ended December 31
In millions 2001 2000 1999
         
Income tax, computed at
    the statutory rate of 35%		   $ 1,100     $ 979 $ 455
Adjustments resulting from          
    State income tax, net
        of federal income
        tax effect		     74     75 47
    Favorable resolution of
        federal tax issues		     (11 )   (18 ) (30 )

    Other items, net

     (13 )   (16 ) (19 )
Total income tax expense   $ 1,150     $ 1,020 $ 453
Effective tax rate     36.6%     36.5% 34.9%



NET DEFERRED INCOME TAX LIABILITY COMPONENTS
        December 31
In millions 2001 2000
Deferred credits and other liabilities   $ 507     $ 429
International property, plant and equipment     109     153
Other     58     10
    Total deferred income tax assets     674     592
Valuation allowance     (17 )   (9 )
    Net deferred income tax assets     657     583
Investments and other assets     (711 )   (320 )
Accelerated depreciation rates     (2,885 )   (2,707 )
Regulatory assets and deferred debits     (290 )   (326 )
Regulatory assets related to restating to
    pre-tax basis		     (465 )   (429 )
    Total deferred income tax liability     (4,351 )   (3,782 )

State deferred income tax, net of federal
    tax effect

     (333 )   (320 )
Total net deferred income tax liability   $ (4,027 )   $ (3,519 )